ABB’s (NYSE:ABB) ongoing corruption case in South Africa is likely to end as soon as next week, as reported by the Wall Street Journal. The industrial and transport technology provider is likely to pay nearly $325 million to settle a case with the South African authorities in which it has been accused of bribery.
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ABB won a contract in 2015 to provide infrastructural technical support to the Kusile Power Station in South Africa. During its tenure as a contractor with Kusile, the company has been involved in a bribery case involving Kusile’s owner, Eskom, and a few other contractors.
The deal marks the company’s third brush with U.S. anti-bribery laws. The company has already settled a case with Eskom by paying $104 million in 2020. In addition, it has been involved in a bribery case involving Mexican government officials to secure contracts from the Mexican state electricity monopoly in 2009.
Importantly, the $325 million settlement payment could impact ABB’s income from operations in the third quarter. Further, it is also expected to affect the company’s cash flows in forthcoming quarters.
Is ABB Stock a Good Buy?
Last month, Goldman Sachs analyst Daniela Costa downgraded ABB to Buy from Strong Buy but continued to expect a “favorable mix of late-cycle capital expenditure exposures for the stock.”
Moreover, ABB stock investors seem upbeat about ABB’s prospects. Among the 586,606 portfolios on TipRanks, there was a 1.6% increase in ABB holdings in the past week.
